Sour economic mood in living room and boardroom
The eroding views were revealed Tuesday by two separate surveys, one that found everyday Americans are increasingly pessimistic about jobs and another that found CEOs have grimmer predictions about upcoming sales.
"The economy is stuck in an unvirtuous cycle," said Mark Vitner, an economist at Wells Fargo. "Consumers are waiting for more jobs to be created, and businesses are waiting for consumers."
The monthly consumer confidence index from the Conference Board, a private research group, fell to 48.5 in September, its lowest point since February and down from 53.2 in August. Economists surveyed by Thomson Reuters were expecting 52.5 for September.
It takes a reading of 90 to indicate a healthy economy — a level not approached since the recession began in December 2007.
Meanwhile, a poll by Business Roundtable, an association of CEOs of big companies, found two-thirds of chief executives expected sales to grow over the next six months. That's down from 79 percent in June.
Causing uncertainty for both groups, Vitner says, are the Nov. 2 elections, when voters worried about increasing deficits and the economy's slow recovery will decide whether to keep Democrats in power in Congress.
The Federal Reserve's efforts to pump up the economy and lower the unemployment rate, stuck at almost 10 percent, have fallen short. Fed chief Ben Bernanke has signaled that the Fed is prepared to take new action if things get worse, but there's no easy solution.
Some companies that had big rounds of layoffs during the worst of the recession, such as drugmaker Bristol-Myers Squibb Co., are still trimming work forces to bring down costs.
The CEO survey suggests companies will be wary about adding workers into 2011. Only 31 percent of CEOs said they expected to increase their payrolls in the next six months, down from 39 percent in June, which was the best reading since before the recession.
The recession is technically over — a panel of economists declared this month that it lasted 18 months and came to an end in July 2009 — but Americans are just as downbeat as they were a year ago.
Consumer confidence "remains quite grim," Franco said. "There's been no consistency and no momentum."
While unemployment is the biggest factor in depressing Americans' moods, they're also dealing with tight credit and depressed home values. Home prices ticked up in July for the fourth straight month, helped by the now-expired home credits, but many cities are bracing for declines in the year ahead, according to the Standard & Poor's/Case-Shiller 20-city home price index.
The declining confidence came as stocks staged a rally in September, putting the Dow Jones industrial average ahead for 2010. Tuesday's report made investors jittery, but major indexes broke even as traders were encouraged by a flurry of corporate deals.
The consumer confidence index was based on a random survey mailed to 5,000 households from Sept. 1 to Sept. 21.
AP Real Estate Writer Janna Herron and AP Business Writer Tali Arbel contributed to this report in New York.
Last updated: 2:51 pm Thursday, December 13, 2012